ORPP planning cost province $14M last year, estimates show

ORPP planning cost province $14M last year, estimates show

By the government's own estimate, Ontario has sunk at least $14 million into a proposed provincial pension plan that now appears destined for the dustbin of history.

This doesn't include any severance payments that soon may be awarded to workers no longer needed to run the Ontario Retirement Pension Plan.

The Liberal government has also earmarked a $240-million loan for the ORPP Administration Corp. – an organization that's amassed 40 to 50 employees. But this was before Ontario's retirement income initiative was marked for death following an agreement in principle on Canada Pension Plan enhancement.

Finance ministers from Ottawa, Ontario and seven other provinces struck a tentative deal on Monday that would strengthen the CPP to an acceptable degree. This has made the ORPP redundant in the eyes of Premier Kathleen Wynne and her government, who had long sought a national solution to bolster retirement income. Ontario and Ottawa have also set a deadline of July 15 for the CPP compromise to be approved by the participating governments.

In the meantime, the costs of the ORPP to date were outlined in the 2016-17 expenditure estimates for Ontario's Ministry of Finance. Those numbers show the "Ontario Retirement Pension Plan Program" had projected operating costs of $1,531,000 for the 2016-17 fiscal year. In 2015-16, it was $14 million: $5.9 million for ORPP-related salaries and wages, $820,000 for employee benefits, $1.26 million for transportation and communication, $5.4 million for "services," and $630,000 for supplies and equipment

Of the $1,531,000 to be spent in 2016-17, $860,000 is for salaries and wages, $141,000 for employee benefits, $474,000 for “services,” $50,000 for transportation and communication costs and $5,000 for supplies and equipment.

For 2016-17, there is also a $240-million loan on the books for the ORPP Administration Corp., an arm's-length entity similar to the Canada Pension Plan Investment Board. The ORPP AC was meant to manage the provincial pension plan and the contributions it was to receive.

The ORPP AC has an initial board of directors and a chief executive officer, former Pan Am Games boss Saäd Rafi. Rafi has a three-year contract with a $525,000 annual salary.

The organization also had in place a chief financial officer and two senior vice-presidents, one of whom was a former press secretary for then-premier Dalton McGuinty. The ORPP AC currently has a staff of 40 to 50 employees, according to a spokesperson for Finance Minister Charles Sousa.

“The work that went into the creation of the ORPP also helped inform our views going into recent CPP negotiations that coverage must be timely and adequate, yesterday’s agreement reflected this work,” said Kelsey Ingram in an email. “Now that we have a deal to enhance retirement security across the country through CPP, the government will work with the Initial Board and management team of the ORPP Administration Corporation (AC) in the coming days to discuss next steps.”

Ontario’s Public Appointments Secretariat lists the ORPP AC’s address as an office tower in downtown Toronto, a few minute’s walk from Queen’s Park. The organization had been recently hiring, too; job ads for a “Relationship Manager, Outreach and Communication” and “Outreach Team, Administrative Co-ordinator” were spotted online.

Wynne said Tuesday there would be costs associated with her government’s decision to go with a CPP compromise over the ORPP. Wynne said they had yet to “tabulate” the bill, but told reporters the province had dodged its biggest expense in not having to set up the ORPP AC.

The minister responsible for the ORPP, Halton MPP Indira Naidoo-Harris, will wind up the pension plan organization, before her job is also made redundant. Wynne said she still wants Naidoo-Harris at the cabinet table.

“There was a 50-50 chance that we were going to have to implement the ORPP,” though, said Wynne Tuesday at Queen’s Park. “We had to make those investments in order to get here.”

But the Progressive Conservatives quickly called for an accounting of the ORPP's costs. "Taxpayers deserve to know how their money was spent by this Liberal Government," said PC pensions critic Julia Munro in a release.

Wynne had long said she preferred a national, CPP-related solution to shore up gaps in retirement income, rather than just an Ontario answer. Wynne had been seeking a compromise on CPP enhancement that would have provided about two-thirds of what the ORPP would offer. She said Tuesday the CPP deal offers that level of benefits.

The premier also said the money has been well spent on the ORPP, as the provincial initiative had put pressure on her peers to get a deal done on the CPP.

“Quite frankly, I was a thorn in the side of many of my colleagues. I kept bringing this up, I kept making it clear that we were moving ahead, and I kept making it clear that we all knew that there was a national problem,” said Wynne. “So it was necessary for us to keep that ORPP organization in place. It was absolutely worth the cost.”

The province appointed a nominating committee in May to recommend directors for the ORPP AC. The three-person nominating committee includes the chair of the ORPP AC’s board.

The Ministry of Finance also recently put out a tender seeking “recruitment services” to aid the nominating committee. The winner of the contract was to help out by “commenting on skills and remuneration frameworks, conducting an executive talent search, conducting interviews and other appropriate assessments, and providing support to the Ministry in finalizing appointments.”

Those services are likely no longer required.

To contact the reporter on this story:
Twitter: @geoffzochodne

Geoff Zochodne

Geoff Zochodne joined QP Briefing in 2014 after working as a reporter, photographer and editorial writer for The Oshawa Express weekly newspaper. He is a graduate of Saint Mary’s University in Halifax. To contact Geoff: gzochodne@qpbriefing.com 905-926-8026 Twitter: @geoffzochodne

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